Forcing Dual Eligibles Into Private Health Plans is No Quick Fix

The nearly nine million Medicare beneficiaries who are also eligible for some form of Medicaid, the so-called dual eligibles, are the subject of federal, state and local policy discussions because many of them are among the highest users of health care services in the country and thus are very costly to both Medicare and Medicaid.  Research suggests that for many, care is fragmented, with multiple physicians prescribing medications and procedures without knowledge of or coordination with each other.[1]  This lack of coordination can lead to poor outcomes and higher costs when the care provided is unnecessary or duplicative.[2]

Of course, lack of care coordination is not unique to those dually eligible for Medicare and Medicaid; it is a significant problem in our entire health care system and one that is the subject of many initiatives authorized in the Affordable Care Act.[3]  It takes on heightened importance in the context of dual eligibles because, as a group, they are significantly more likely than other Medicare beneficiaries to have multiple chronic conditions, limitations with activities of daily living and cognitive impairments.[4]

Deficit reduction proposals currently circulating in Washington include proposals to require or facilitate the placement of dual eligibles into "managed care."[5] A closer look at these proposals reveals that their emphasis is on the use of private plans to deliver health care, not on the management or coordination of the individual beneficiary's health care needs.

This Alert examines who the duals are, what issues arise with respect to requiring them to use private plans for their health care and what initiatives are currently underway to address the serious issues of care coordination that result in dual eligibles receiving less than optimal care.[6]

Dual Eligibles Are the Most Vulnerable People In the Health Care System[7]

Dual eligibles qualify for Medicare because of age or disability, and qualify for Medicaid because they are low-income. Two-thirds have three or more chronic conditions and three-fifths have cognitive impairments. Over 85 percent have incomes below 150 percent of the poverty level. Sixteen percent of dual eligibles live in long-term care settings, such as nursing homes, because of functional limitations and/or cognitive/mental impairments. They are nine times more likely than non-dual Medicare beneficiaries to reside in these settings.  They are twice as likely as other Medicare beneficiaries to have no high school diploma. Low education level, frailty and low income combine to make increases in cost of coverage devastating, as few can afford to pay out-of-pocket or experience disruptions in their care. 

Mandatory Private "Managed Care" Is NOT a Quick Fix to Address Cost and Quality for Dual Eligibles

Private Medicare and Medicaid managed care plans are only one of many models of care that might improve care and reduce costs.[8]

The innovations in care supposedly provided by private managed care plans (case management, counseling, care coordination) can also be provided, sometimes more cheaply, through other models such as primary care case management, health homes, and Accountable Care Organizations.

The track record of private dual eligible Medicare Special Needs Plans is mixed, at best:

• Many plans have been unable to demonstrate any improvements in quality.
• Few plans coordinate with Medicaid or have adequate networks of Medicaid providers.
• Most plans will not describe the model of care that makes their plan special.[9]

In addition to the issues above:

• Most Medicaid private managed care plans have never before been tasked with providing long term services and supports, a key issue for the dually eligible population. Doing so requires expertise in evaluating not just the medical needs, but also the social needs of the person, an approach that the existing private medical managed care model cannot provide.
• Other models of care coordination work better in some states. Many states lack the private managed care plan infrastructure to serve dual eligibles adequately, and those private plans that are present lack experience caring for this population.
• Private managed care plans in Medicare have historically cost more, not less, than the traditional system.  Private Medicaid managed care plans do not always reduce costs and in some cases may cost more than fee-for-service Medicaid.[10]
• Medicare beneficiaries have never been denied their statutory right to receive care from providers of their choice, as they would be if forced into private plans.
• Quantifiable savings from any change in how care is delivered will be minimal until we learn what works well.  The only way to guarantee savings is to determine current costs and cut the capitation (per person payment) rate by a designated percentage. Such an approach could threaten health and lives of millions of people.

Better Care for Dual Eligibles Should Be the Primary Policy Goal; Reduced Costs Would Follow

Better coordinated care and early interventions can reduce undesirable and costly outcomes. For example, better discharge planning and transitional care reduces avoidable re-hospitalizations; better medication management can prevent dangerous drug interactions; and increased home and community based supports can prevent unnecessary institutionalization. Policy should focus on getting people the care they need when they need it, keeping people in a setting that best meets their needs, guaranteeing access to all covered benefits, and ensuring Medicare and Medicaid work well together.

Developing effective models of care for dual eligibles takes an intensive, long-term commitment from providers, payers, and people receiving services. It cannot be mandated from above.

Current Policy Provides States with Appropriate Flexibility to Innovate

The Affordable Care Act has catalyzed a wave of innovation around dual eligible policy. The Medicare-Medicaid Coordination Office and Innovation Center have each launched multiple innovations, using both private "managed care" plans and other alternative models.

Thirty-seven states are planning to participate in dual eligible initiatives, including but not limited to private managed care.

Fifteen states are already developing new models of care for dual eligibles under contract with the CMS Innovation Center.

Legislation that mandates any one particular model, such as managed care through private plans, will tie the hands of states that are pursuing alternative models and prevent the further development of alternative models that demonstrate promise for better quality care at a reduced cost to both Medicare and Medicaid.

The ongoing efforts will inform future policy. They must be allowed to work.

All Dual Eligible Policy Initiatives Must Provide Key Consumer Protections

• People's right to choose how, where, and from whom they receive care. 
• Access to all services covered by Medicaid and Medicare, as well as enhanced benefits, especially those designed to keep individuals living at home and in the community.
• Continuity of care allowing access to current providers and services, treatments and drug regimes during a transition process. 
• The ability to appeal decisions and to file complaints about problems encountered in dealing with the program.
• Meaningful notices and other communications to inform about, for example, enrollment rights and options, plan benefits and rules and care plan elements.
• Culturally and linguistically appropriate and physically accessible services.
• Access to appropriate providers, who are able to serve the unique needs of dual eligibles.
• Strong accountability and oversight of the delivery of all services.
• Payment structures to promote delivery of optimal care, and not reward the denial of needed services.
• Build on existing structures and delivery systems.

Conclusion

Members of Congress should not be seeking to reduce the deficit through ill-conceived, one-size fits all changes to the health care delivery system for the most vulnerable users of that system.  Nor should States rush to develop plans to integrate services for dual eligibles that rely solely on private health plans. Significant inroads are being made in improving health care services for dual eligibles.  These efforts and innovations need time to develop and to demonstrate their efficacy.  The Affordable Care Act provided new models and authority to test innovations.  The ACA should be given time to work.